Collecting and analyzing panel data over the last four U.S. presidential elections, we study the ... more Collecting and analyzing panel data over the last four U.S. presidential elections, we study the drivers of self-reported happiness. We relate our empirical findings to existing models of elation, reference dependence, and belief formation. In addition to corroborating previous findings in the literature (hedonic asymmetry/hedonic loss aversion, hedonic adaptation and motivated beliefs), we provide novel results that extend the literature in four dimensions. First, happiness responds to changes relative to both the political status quo (i.e., the incumbent presidential party) and the expected electoral outcome, providing support for two major hypotheses regarding reference point formation. Individuals exhibit hedonic loss aversion to deviations from expectations, but hedonic loss neutrality to changes from the status quo. Second, the speed of hedonic adaptation to deviations from the status quo is significantly slower than the speed of hedonic adaptation to surprises. Third, expectations affect happiness in a nonlinear way, consistent with Gul's model of disappointment aversion, but contrary to other influential reference-dependent models. Fourth, both "objective" and motivated subjective beliefs matter for the happiness reactions, although subjective beliefs matter more.
for outstanding research assistance. This work utilized the Summit supercomputer and the Alpine h... more for outstanding research assistance. This work utilized the Summit supercomputer and the Alpine high performance computing resource at the University of Colorado Boulder. The content is solely the responsibility of the authors and does not necessarily represent the official views of the National Institutes of Health or other funding bodies. The authors received IRB approval from the relevant institutions and have no material financial interests that relate to the research described in this paper. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
We are grateful to Marc Fleurbaey for helpful comments and to Colby Chambers, Dimitriy Leksanov, ... more We are grateful to Marc Fleurbaey for helpful comments and to Colby Chambers, Dimitriy Leksanov, and Jeffrey Ohl for research assistance. For financial support, we are grateful to NIH/NIA grant R01-AG065364 to Hebrew University. The content is solely the responsibility of the authors and does not necessarily represent the official views of the National Institutes of Health or other funding bodies. The authors have no material financial interests that relate to the research described in this paper. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
For many reasons, education has long been recognized as an important influence on attitudes and v... more For many reasons, education has long been recognized as an important influence on attitudes and values, being especially powerful because schools were designed explicitly for the purpose of disseminating new information and ideas. Although most research conceptualizes education as merely the number of years of school a person has completed, this paper goes beyond this simple approach and considers both school attendance and the content of the curriculum. We do this by focusing on both college attendance and the majors that young people pursue while they are in college. Our motivating hypothesis is that attitudes toward family, careers, and society are affected differentially by the major in college. We hypothesize that majors in the humanities and social sciences will result in less positive attitudes toward the importance of marriage, living close to parents, and other aspects of family life. In our examination of the influence of certain majors on attitudes and values, we also consider the possibility that attitudes and values influence the choice of major. We conducted our analyses by examining the influence of initial major on subsequent attitudinal changes and examining the influence of initial attitudes on subsequent changes in major. The detailed analyses suggest that there is an effect of majoring in the humanities and social sciences on family attitudes and values, with such majors placing less emphasis than others on marriage, children, and living close to parents. Students in the humanities and social sciences also place more emphasis than others on correcting social inequalities, finding purpose in life, and making a contribution to society. At the same time, we found that placing strong emphasis on family matters does not appear to have any causal influence on staying in the humanities and social sciences. That is, people giving strong importance to family matters do not seem any more or less likely than others to leave the humanities and social sciences. However, among college students who decide to change majors, the destination major seems to be influenced by the importance placed on family life. Students who place strong importance on family matters and who switch majors are less likely than those placing less emphasis on the family to go into the humanities and social sciences. And, placing emphasis on societal contributions and self fulfillment leads to choosing the humanities and social and natural sciences over the trades. There are, thus, a multitude of intricate causal forces connecting attitudes and values to college experience. attitudes and values concerning family, careers, and society. In each of the follow-up interviews information is obtained about college attendance and program of study. This panel study, thus, permits in-depth examination of college experiences and their relationship to values concerning several important dimensions of life. Theoretical Motivation This research project is particularly significant in today's world because education has long been considered one of the leading forces of social change throughout the world (Thornton 2005; Cleland 2001; Jejeehoy 1995; Thornton and Lin 1994). Theorists in multiple fields have outlined numerous reasons why schools and educational attainment would affect a wide range of human values and behaviors, including earnings, wealth, family behavior and processes, interpersonal relationships, religion, and values about the universe, family, social relations, freedom, and equality. In addition, numerous empirical studies around the world consistently show that educational achievements are strongly related to these central dimensions of human
and seminar participants at a number of institutions and conferences. We also thank several anony... more and seminar participants at a number of institutions and conferences. We also thank several anonymous referees. This is a very substantially revised version of papers previously circulated as Federal Reserve International Finance Discussion Paper No. 625 and Harvard Institute of Economic Research Discussion Paper No. 1986. Basu and Kimball gratefully acknowledge support from a National Science Foundation grant to the NBER. Basu also thanks the Alfred P. Sloan Foundation for financial support. We particularly thank Shanthi Ramnath and Chin Te Liu for superb research assistance. This paper represents the views of the authors and does not necessarily reflect the views of anyone else associated with the Federal Reserve System. The views expressed herein are those of the author(s) and not necessarily those of the National Bureau of Economic Research.
For many reasons, education has long been recognized as an important influence on attitudes and v... more For many reasons, education has long been recognized as an important influence on attitudes and values, being especially powerful because schools were designed explicitly for the purpose of disseminating new information and ideas. Although most research conceptualizes education as merely the number of years of school a person has completed, this paper goes beyond this simple approach and considers both school attendance and the content of the curriculum. We do this by focusing on both college attendance and the majors that young people pursue while they are in college. Our motivating hypothesis is that attitudes toward family, careers, and society are affected differentially by the major in college. We hypothesize that majors in the humanities and social sciences will result in less positive attitudes toward the importance of marriage, living close to parents, and other aspects of family life. In our examination of the influence of certain majors on attitudes and values, we also consider the possibility that attitudes and values influence the choice of major. We conducted our analyses by examining the influence of initial major on subsequent attitudinal changes and examining the influence of initial attitudes on subsequent changes in major. The detailed analyses suggest that there is an effect of majoring in the humanities and social sciences on family attitudes and values, with such majors placing less emphasis than others on marriage, children, and living close to parents. Students in the humanities and social sciences also place more emphasis than others on correcting social inequalities, finding purpose in life, and making a contribution to society. At the same time, we found that placing strong emphasis on family matters does not appear to have any causal influence on staying in the humanities and social sciences. That is, people giving strong importance to family matters do not seem any more or less likely than others to leave the humanities and social sciences. However, among college students who decide to change majors, the destination major seems to be influenced by the importance placed on family life. Students who place strong importance on family matters and who switch majors are less likely than those placing less emphasis on the family to go into the humanities and social sciences. And, placing emphasis on societal contributions and self fulfillment leads to choosing the humanities and social and natural sciences over the trades. There are, thus, a multitude of intricate causal forces connecting attitudes and values to college experience. attitudes and values concerning family, careers, and society. In each of the follow-up interviews information is obtained about college attendance and program of study. This panel study, thus, permits in-depth examination of college experiences and their relationship to values concerning several important dimensions of life. Theoretical Motivation This research project is particularly significant in today's world because education has long been considered one of the leading forces of social change throughout the world (Thornton 2005; Cleland 2001; Jejeehoy 1995; Thornton and Lin 1994). Theorists in multiple fields have outlined numerous reasons why schools and educational attainment would affect a wide range of human values and behaviors, including earnings, wealth, family behavior and processes, interpersonal relationships, religion, and values about the universe, family, social relations, freedom, and equality. In addition, numerous empirical studies around the world consistently show that educational achievements are strongly related to these central dimensions of human
Replication data for: Sticky-Price Models and Durable Goods
The inclusion of a durable goods sector in sticky-price models has strong and unexpected implicat... more The inclusion of a durable goods sector in sticky-price models has strong and unexpected implications. Even if most prices are flexible, a small durable goods sector with sticky prices may be sufficient to make aggregate output react to monetary policy as though most prices were sticky. In contrast, flexibly priced durables with sufficiently long service lives can undo the implications of standard sticky price models. In a limiting case, flexibly priced durables cause monetary policy to have no effect on aggregate output. Our analysis suggests that durable goods prices are the most relevant data for calibrating price rigidity. (JEL E21, E23, E31, E52)
Replication data for: A Well-Being Snapshot in a Changing World
Although technology-driven economic growth generates gains in consumption and employment opportun... more Although technology-driven economic growth generates gains in consumption and employment opportunities, it may also negatively impact other dimensions of well-being, such as emotional well-being or sense of stability. We study 204 aspects of self-reported well-being among 1,576 US MTurk survey respondents, aggregated into seven themes: evaluative well-being, emotional well-being, positive perceptions of technology or economic growth, autonomy and flexibility, work environment, feelings of calmness and stability, and feelings of belonging and connection. Demographic associations with aspects of well-being vary somewhat across the themes. We highlight the value of a multidimensional approach when comparing well-being across different groups in the United States.
Psychologists have developed effective survey methods of measuring how happy people feel at a giv... more Psychologists have developed effective survey methods of measuring how happy people feel at a given time. The relationship between how happy a person feels and utility is an unresolved question. Existing work in Economics either ignores happiness data or assumes that felt happiness is more or less the same thing as flow utility. The approach we propose in this paper steers a middle course between the two polar views that "happiness is irrelevant to Economics" and the view that "happiness is a sufficient statistic for utility." We argue that felt happiness is not the same thing as flow utility, but that it does have a systematic relationship to utility. In particular, we propose that happiness is the sum of two components: (1) elation-or short-run happiness-which depends on recent news about lifetime utility and (2) baseline mood-or long-run happiness-which is a subutility function much like health, entertainment, or nutrition. In principle, all of the usual techniques of price theory apply to baseline mood, but the application of those techniques is complicated by the fact that many people may not know the true household production function for baseline mood. If this theory is on target, there are two reasons data on felt happiness is important for Economics. First, short-run happiness in response to news can give important information about preferences. Second, long-run happiness is important for economic welfare in the same way as other higher-order goods such as health, entertainment, or nutrition. 1 We would like to acknowledge first and foremost the substantial contributions of Norbert Schwarz to this paper. Our discussions with him from the very first beginnings of this paper clarified many things for us, particularly about the empirical evidence on happiness measures. However, we need to make clear that there are important aspects of our theoretical position he would not agree with. In addition to Norbert Schwarz, we would like to thank
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